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August 10, 2010

Amazon - the international opportunity and big ChannelAdvisor amazon news.

On their Q2 call, Amazon executives dropped a little number on analysts that was a pretty big surprised.  They noted they are adding 13 fulfillment centers (FCs)  to the ~38 they have now.  That's a > 30% increase in fulfillment centers and depending on the size could be an even larger expansion from a sq-ft and thus capacity standpoint.  That's a big investment and it left people scratching their heads - why, where, how big, and does this mean Amazon is seeing another leg of growth (vs. slowing down)?

Digging a little deeper on Amazon's European Growth

Earlier this week, James Mitchell @ Goldman Sachs did some sleuthing and discovered that one of the large new FCs will be in Germany in the North Rhine-Westphalia area.  Here are some tidbits from a note he published on the topic Monday->

Amazon announced it will open a 600,000 square foot fulfillment center in Werne, North Rhine-Westphalia (Germany’s wealthiest state, with about a quarter of its GDP) in September. The center will employ up to 800 full time and seasonal workers. Amazon will add another 1 million square feet elsewhere in North Rhine-Westphalia sometime in 2011. Amazon already operates about 2 million square feet of capacity in Germany, in Bad Hersfeld and Leipzig.

(1) We believe the fact that this center is in Europe supports our view that much of Amazon’s capacity expansion in 2010 is in less-mature international markets, rather than the US. See our prior note, Fulfillment centers spearhead Europe and China expansion, July 27, 2010. (2) The size and location of the center may allow Amazon to provide same-day shipping in Ruhr-Rhine cities such as Koln, Essen, Dortmund, and Dusseldorf, just as it already does in Greater London and Greater Tokyo. (3) The new center may also facilitate Amazon’s expansion into the Netherlands and Belgium, where Amazon began offering free shipping in 2009. 


So, while Amazon doesn't provide specifics of their international business, other than splitting out domestic/non-domestic, we see interesting hints that Europe is growing very rapidly.

ChannelAdvisor Expands Amazon solution to Germany and France

In fact, our UK customers have been asking for us to support Amazon DE/FR for the last two years as they see that as the next logical step.  We're pleased today to announce that not only have we added support for these regions, we are also bringing our industry-first FBA support to the region.

A couple of points about this announcement:

  • Amazon is ChannelAdvisor's fastest growing channel and we are investing significant resources to expand the offering.  This is an example of us rapidly responding to the market and offering our customers a turnkey ability to open up new geographies for cross-border-trade.  More to come, stay tuned.
  • Timing-wise, by launching the solution in August, we are giving customers plenty of time to establish their amazon.de and amazon.fr presences to enjoy a substantial boost from those regions.
  • For details on the announcement - follow this link.
  • We are hosting a webinar on August 17th with more details at 9am ET (2pm GMT) - you can sign up here.

How big is Amazon EU?

When exploring the opportunity, we wanted to get an idea of how big the top countries for Amazon are.   While Amazon doesn't break this down, comscore does provide unique visitor traffic for each region.

For June, here is the data from a unique visitor perspective:

  • Amazon.de - 21m visitors/m
  • Amazon.co.uk - 16m visitors/m
  • Amazon.fr - 8m - visitors/m

Normal caveats apply that traffic isn't the same as GMV and what-not, but when you look at this from a graphical perspective, you see that the DE/FR opportunity is 1.5x that of just the UK:


Amazon_eu_piechart
 




SeekingAlpha Disclosure - I am long Amazon and google. eBay is an investor in ChannelAdvisor.






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